This week, ILSR and our allies at the National Grocers Association (NGA) intervened in a major antitrust lawsuit to ensure that the Robinson-Patman Act can continue to be used to prevent discrimination and unfairness in the retail industry.
The amicus brief, filed Monday in the Ninth Circuit Court of Appeals, asks the appeals court to overturn a lower court’s decision that would, if upheld, significantly limit a key part of the Robinson-Patman Act that bans manufacturers from giving benefits and rebates to one wholesaler or retailer but not its rivals.
The case, U.S. Wholesale Outlet & Distribution, Inc., et al., v. Innovation Ventures, LLC, et al, is at the appeals court for the second time. A group of California wholesalers sued the parent company of 5-Hour Energy in 2018, alleging that it gave Costco discounts, rebates, and other benefits that it didn’t offer to smaller wholesalers. California district court Judge Consuelo Marshall and a jury ruled in favor of 5-Hour Energy, but the Ninth Circuit found that Judge Marshall was wrong when it rejected the wholesalers’ demand for an injunction to stop 5-Hour Energy’s discrimination.
In his most recent ruling after the Ninth Circuit remanded the case, Judge Marshall again rejected the wholesalers’ demand for an injunction under the Robinson-Patman Act, because they did not prove potential damage to competition. While Judge Marshall’s ruling erects a high barrier to enforcing the act, the plain language of the statute and its history show that Congress intended the law to be straightforward to enforce, believing that only by “protecting small competitors do we preserve competitive marketplaces,” as our brief notes.
As ILSR and the NGA explain in their brief to the court, the section of the Robinson-Patman Act in question — called Section 2(d) — does not require plaintiffs to prove potential or real harm to competition. Instead, the wholesalers only needed to show that 5-Hour Energy gave Costco discounts and promotions that it did not offer to them, a requirement Judge Marshall found the plaintiffs had met.
In demanding evidence of potential competitive harm, ILSR and NGA write in the brief, “the district court proceeded to analyze a question it did not need to ask and held Wholesalers to a standard they were not required to meet.”
The outcome of the case will have a lasting impact on private price-discrimination enforcement in cases where a manufacturer is accused of offering rebates and perks to a powerful wholesaler or retailer but not its smaller rivals. While a half-century of pro-bigness case law has made it difficult to enforce parts of the Robinson-Patman Act, Section 2(d) of the law still offers small retailers and wholesalers a clear pathway to stopping certain kinds of discriminatory conduct.
“Amici submit that the district court’s judgment seriously jeopardizes RPA enforcement and must be reversed lest another notch on the belt of corporate consolidation be forged,” the organizations write in the brief.
A copy of the amicus brief can be found here.
For more about the importance of the Robinson-Patman Act, see ILSR’s recent fact sheet, “The Robinson-Patman Act: A Critical Tool For Fair Competition.“
“Amici submit that the district court’s judgment seriously jeopardizes RPA enforcement and must be reversed lest another notch on the belt of corporate consolidation be forged,” the organizations write in the brief.
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